Following the 2023 Lending Standards Board (LSB) report, which underscored the crucial role that financial institutions can play in unlocking the untapped potential of Ethnic Minority-Led Businesses (EMBs), the non-profit organisation is developing a new inclusive Code to drive essential improvements in access to finance for these firms.
In 2023, the LSB reported that ethnic minority entrepreneurs, including those from Black, Asian, and other minority groups, contribute an estimated £25billion to the UK economy annually. However, despite their significant economic impact, the LSB’s report found that EMBs face barriers when seeking access to financial support, including a lack of understanding of religious or cultural differences by financial institutions.
Its new Code will look to enable the financial services sector to provide EMBs with the specific help they need to thrive and grow – while also powering growth in the wider UK economy. The new Code, which will be open to firms across the financial services sector, including lenders and investors, is expected to be available early next year.
Diana Chrouch, Special Advisor to the 2019-24 All-Party Parliamentary Group (APPG) for Ethnic Minority Business Owners, will support the development of the Code. She explained: “The development of an inclusive Code by the LSB is a major milestone in ensuring the financial services sector better serves the UK’s diverse multi-ethnic business communities.
“Given its role in the sector and its track record, the LSB is very well-placed to lead the development of this Code, and I look forward to seeing what the Code – and its future signatories – can do to extend protections for EMBs and break down fundamental barriers that we face when accessing finance.”
‘Leading the way on inclusion and innovation’
Emma Lovell, chief executive of the Lending Standards Board
Emma Lovell, chief executive of the LSB, also explained the barriers its new inclusive Code will aim to overcome: “The UK’s EMBs have a significant role to play in driving sustainable, equitable economic growth, but all too often they face barriers to accessing finance. Failure by the sector to embrace the change needed to resolve this will mean EMBs’ vast potential risks going unrealised.
“Last year, we found that EMBs felt lenders didn’t cater for their specific needs and that, for example, lenders seemed unaware of the different business models and growth journeys that EMBs adopt compared to the wider business community. This can discourage EMBs from seeking finance in the first place, or mean that EMBs don’t tick typical lending criteria boxes. This might lead to opportunities to back exciting, innovative entrepreneurs being missed. The new Code will drive a consistent, tailored approach to EMB access to finance across the financial services sector.
“Firms signing up to the Code will be leading the way on inclusion and innovation, and will be at the forefront of much-needed changes that will boost trust between the financial services sector and EMBs.”
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